Three Key Components to Maximizing Return on Investment in Residential Property

Why is residential property a good investment right now?

There are three key components that continue to make residential property the ideal investment vehicle.

1. Interest rates remain at record lows

2. Supply and demand factors favor investors

3. Residential is the value most favored by banks

We can see that these three components have obvious merit, but choosing the best investment property is a process that involves knowing your budget to buy and your budget to maintain a property. Also knowing what you want to get out of an investment and when is important in the selection process. The goal is to find the right property that will allow you to achieve your personal goals in the most efficient and profitable way possible.

Residential investment properties come in several different types, for example, multi-unit, double occupancy, single dwelling, student housing, serviced apartments, high-rise, low-rise, luxury, executive, affordable, inner suburban, outer suburban. The choice of property is often dictated by price and personal circumstances. Knowing the right budget for you is the key to correctly selecting the right property.

Once your budget and property type are selected, you should consider the property, as you can significantly improve your financial results by correctly establishing the structure in which you acquire the property. For example, factors such as stamp duty, GST in the case of development, superannuation i.e. self-managed funds using collateral installment agreements, depreciation tax allowances, negative leverage and land tax, create the need to ensure that the correct entity is established at the point of acquisition. .

Judging that the timing is right based on the three components above, we set our targets for our investment strategy.

If, for example, we conclude that we want a long-term investment strategy established and sustained for, say, ten years, then more options open up. For example, you might consider a new subdivision that had a compelling future prospect or attraction.

Where as if your goal is to make money and sell within a year or two, then this would possibly not be your investment vehicle of choice. Decisions around risk, leverage, personal time involvement and time to return are all factors to consider when selecting the right real estate investment strategy.

Therefore, the message of this article is to suggest that while the timing may be right, your returns can be significantly enhanced simply by selecting the right vehicle for your personal investment goals and the right entity and structure to place it with.

If you’re busy building a career, profession, or business, talk to a real estate investment advisor. This will potentially open up ideas you hadn’t thought of, and if not, there’s a good chance you’re talking to the wrong consultant for you.

The key is to select a consultant who specializes in a location that you understand or want to invest in. Also the sector of the market in which you feel comfortable or in which you want to participate. A good quality real estate investment adviser will not only ensure that your fees are covered in your property negotiations, but you will also be assured of getting the right property to fit your personal goal and the right structures that maximize profits. returns on your investment. Hiring a real estate investment consultant also takes any potential emotion out of the equation, particularly with residential real estate investing.

Seeking quality advice makes sense, learning from others saves time and gains quality insights for your next investment.

Enjoy the process.